Regulator pledges ‘swift action’ to support home ownership
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The City regulator has promised “swift action” to look at ways to make it easier to access a mortgage, including a public discussion on the future of the market to be launched this summer.
In May, the Financial Conduct Authority (FCA) will launch a consultation proposing early ideas to simplify rules, to make it easier to access options such as remortgaging with a new lender and reducing a mortgage term.
And then in June, the FCA will open a public discussion on the future of the mortgage market.
This will involve considering what the market needs to deliver for different consumers at different stages in their lives and the wider UK economy, and the role of regulation to deliver it.
The FCA also said it will shortly launch a call for evidence on current and alternative approaches to stress testing.
When lenders decide whether to approve a mortgage, they test whether a borrower could still afford their mortgage at higher interest rates.
As interest rates fall, the current market approach to interest rate stress testing may be unduly restricting access to otherwise affordable mortgages, the regulator said.
It is also reminding lenders of flexibility in its existing rules, to ensure that creditworthy consumers can access the affordable mortgage they need, supporting home ownership.
Mortgage lending rules were toughened following the 2008 financial crisis, to help ensure there would be no return to irresponsible lending.
The FCA has previously said it would be looking into simplifying mortgage rules.
Nikhil Rathi, chief executive of the FCA, said on Friday: “We are taking swift action to support people in getting the keys to their own home.
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“Firms have the flexibility to help more people become homeowners and we want them to use it.
“There is more to be done, and we will be delivering further proposals quickly to support home ownership and the wider UK economy.”
Chancellor Rachel Reeves said: “This is welcome action by the regulator to kick-start economic growth and help working families get on the housing ladder.
“The world is changing. That is why we must go further and faster in delivering on our plan for change, so we can get more money into people’s pockets.”
On Monday, banking and finance industry trade body UK Finance said that since toughened mortgage lending rules came into force in the 2010s, alongside tightened affordability more broadly, it has seen changes for first-time buyers in the level of deposit required, particularly in and around London.
